Introduction
The Maharashtra Goods and Service Tax (‘GST’) Department, vide circular dated 13.08.2024[i], has issued guidelines for recovering outstanding dues in cases where the first appeal has been disposed of and the GST Appellate Tribunal is not operational.
The CBIC, in its circular dated 11.07.2024[ii], acknowledged the difficulties faced by taxpayers due to the non-constitution of the GST Appellate Tribunal. It noted that tax officers took recovery actions once the appellate authorities confirmed the tax demand. The circular, therefore, laid down certain facilitation measures for taxpayers.
To maintain uniformity, the Maharashtra GST department has adopted the CBIC circular dated 11.07.2024 and also given certain instructions to taxpayers and appellate authorities under its jurisdiction.
CBIC circular dated 11.07.2024 regarding recovery of dues
Stay on recovery on payment of pre-deposit and filing of declaration: Recovery Proceeding & Appeals
The circular states that where the first appellate authority confirms demand but the appeal cannot be filed due to the non-constitution of the GST Appellate Tribunal, the taxpayer can make the pre-deposit payment on the online portal and file an undertaking that they will file an appeal once the GST Appellate Tribunal becomes functional. The circular provides for the procedure to be followed regarding pre-deposit payment.
The circular states that if the above steps are taken, the demand for the remaining amounts shall be stayed. However, the circular notes that failing to make the pre-deposit and provide the prescribed undertaking will be interpreted as the taxpayer's intention not to file an appeal and recovery proceedings may be initiated against such taxpayers.
Adjustment from amounts paid through Form GST DRC-03
It is also provided in the circular that payments made by taxpayers through Form GST DRC-03 are adjustable towards the outstanding tax demands by filing Form GST DRC-03A on the online portal. If this is done, the tax payment will be mapped with a particular tax demand.
The circular further provides that the payments made through GST DRC-03A shall also be considered towards payment of pre-deposit as required before the appellate authorities and the appellate tribunal, and the balance demand shall be stayed. It is clarified that the balance amounts shall become recoverable if the taxpayer does not file the appeal. However, it has been clarified that the adjustment of tax paid will not be possible for those cases where the proceedings with respect to which tax was paid through DRC-03 have been concluded.
The circular further states that the filing facility for DRC-03A is not functional on the online portal. Therefore, until such filing becomes operational, taxpayers are required to inform the proper officer, and upon such intimation, the recovery proceedings will not be initiated. It is provided that once the filing facility becomes available, taxpayers must file Form GST DRC-03A on the online portal.
Other procedural clarifications/instructions in the circular dated 13.08.2024
Fresh undertaking: The circular states that in respect of taxpayers who had obtained a stay on the basis of declarations made under the previous circulars are now required to pay the pre-deposit amount as mandated in the circular dated 11.07.2024 and also file a fresh undertaking (as given in the circular dated 13.08.2024) within 2 months from the date of issuance of the circular. The circular clarifies that if the above is not done, it would be presumed that the taxpayer is unwilling to file an appeal and recovery proceedings can be initiated against such taxpayers under the provisions of law.
Instructions to Appellate Authorities: Further, the circular also states that the appellate authorities are required to incorporate specific paragraphs in the preamble to the order to the effect that:
a. the order can be appealed to the Appellate Tribunal when it becomes operational within the time limit prescribed under the Act or the date when the President of the GST Appellate Tribunal enters office, whichever is later.
b. the taxpayer shall file the requisite undertaking/ declaration with the jurisdictional proper officer and make the payment of the pre-deposit as prescribed. If this is done, the remaining demand will be stayed.
Conclusion
Circulars issued by the CBIC and various state GST departments would ease the compliance burden on taxpayers and save them from needless recovery proceedings. However, taxpayers must ensure that they make the necessary pre-deposit payments and file the necessary declarations with the jurisdictional officers in a timely manner to avoid any coercive steps being taken against them.
End Notes
[i] MGST Trade Circular No. 21T of 2024; 13.08.2024.
[ii] CBIC Circular No. 224/18/2024-GST; 11.07.2024.
Authored by Purvi Garg, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.
Comments